The Geography of Equity Listing: Why do Companies List Abroad ?

This paper documents aggregate trends in the foreign listings of companies, and analyzes their distinctive pre-listing characteristics and post-listing performance. In 1986-97, many European companies listed abroad, mainly on U.S. exchanges, while the number of U.S. companies listed in Europe decreased. The characteristics and performance of European companies differ sharply depending on whether they cross-list in the U.S. or within Europe. In the first case, companies tend to be high-tech and export-oriented, and pursue a strategy of rapid expansion with no significant leveraging. In the second case, companies do not grow more than the control group, and increase their leverage after cross-listing. In both cases, cross-listing companies tend to be large and recently privatized firms, and expand their foreign sales after listing abroad.